1-1 By: Hawley (Senate Sponsor - Truan) H.B. No. 1029 1-2 (In the Senate - Received from the House May 5, 1997; 1-3 May 6, 1997, read first time and referred to Committee on 1-4 Intergovernmental Relations; May 15, 1997, reported favorably by 1-5 the following vote: Yeas 11, Nays 0; May 15, 1997, sent to 1-6 printer.) 1-7 A BILL TO BE ENTITLED 1-8 AN ACT 1-9 relating to the creation of municipal development districts; 1-10 authorizing the imposition of certain local taxes and the issuance 1-11 of local bonds. 1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-13 SECTION 1. Subtitle A, Title 12, Local Government Code, is 1-14 amended by adding Chapter 377 to read as follows: 1-15 CHAPTER 377. MUNICIPAL DEVELOPMENT DISTRICTS 1-16 SUBCHAPTER A. GENERAL PROVISIONS 1-17 Sec. 377.001. DEFINITIONS. In this chapter: 1-18 (1) "Board" means the board of directors of a 1-19 municipal development district. 1-20 (2) "District" means a municipal development district 1-21 created under this chapter. 1-22 (3) "Development project": 1-23 (A) means: 1-24 (i) a "project" as that term is defined by 1-25 Section 4B(a), Development Corporation Act of 1979 (Article 5190.6, 1-26 Vernon's Texas Civil Statutes); and 1-27 (ii) a convention center facility or 1-28 related improvement such as a convention center, civic center, 1-29 civic center building, civic center hotel, or auditorium; and 1-30 (B) includes parking areas or facilities that 1-31 are used to park vehicles and that are located at or in the 1-32 vicinity of other convention center facilities. 1-33 Sec. 377.002. APPLICATION. This chapter applies only to a 1-34 municipality with a population of less than 10,000 that is located 1-35 in more than two counties, at least one of which borders the Gulf 1-36 of Mexico. 1-37 (Sections 377.003-377.020 reserved for expansion 1-38 SUBCHAPTER B. MUNICIPAL DEVELOPMENT DISTRICT 1-39 Sec. 377.021. CREATION. (a) A municipality may call an 1-40 election on the question of creating a municipal development 1-41 district under this chapter to plan, acquire, establish, develop, 1-42 construct, or renovate one or more development projects in the 1-43 district. 1-44 (b) The order calling the election must: 1-45 (1) define the boundaries of the district to include 1-46 all or part of the boundaries of the municipality; and 1-47 (2) call for the election to be held within those 1-48 boundaries. 1-49 (c) The ballot at an election held under this section must 1-50 be printed to permit voting for or against the proposition: 1-51 "Authorizing the creation of the ____ Municipal Development 1-52 District (insert name of district) and the imposition of a sales 1-53 and use tax at the rate of ____ of one percent (insert one-eighth, 1-54 one-fourth, three-eighths, or one-half, as appropriate) for the 1-55 purpose of financing development projects in the district." 1-56 (d) The district is created if a majority of the registered 1-57 voters of the proposed district voting at the election favor 1-58 creation of the district. 1-59 (e) If a majority of the registered voters of the proposed 1-60 district voting at the election to create the district vote against 1-61 creation of the district, another election on the question of 1-62 creating a municipal development district may not be held in the 1-63 municipality before the first anniversary of the most recent 1-64 election concerning creation of a district. 2-1 (f) The Election Code governs an election held under this 2-2 chapter. 2-3 Sec. 377.022. POLITICAL SUBDIVISION; OPEN MEETINGS. (a) A 2-4 district is a political subdivision of this state and of the 2-5 municipality in which the district is located. 2-6 (b) A district is subject to Chapter 551, Government Code. 2-7 (Sections 377.023-377.050 reserved for expansion 2-8 SUBCHAPTER C. BOARD OF DIRECTORS 2-9 Sec. 377.051. COMPOSITION AND APPOINTMENT OF BOARD. (a) A 2-10 district is governed by a board of at least four directors. 2-11 (b) The board is appointed by the governing body of the 2-12 municipality in which the district is located. 2-13 (c) Directors serve staggered two-year terms. A director 2-14 may be removed by the appointing municipality at any time without 2-15 cause. Successor directors are appointed in the same manner as the 2-16 original appointees. 2-17 (d) To qualify to serve as a director, a person must be a 2-18 resident of the municipality in which the district is located. An 2-19 employee, officer, or member of the governing body of the 2-20 municipality may serve as a director, but may not have a personal 2-21 interest in a contract executed by the district other than as an 2-22 employee, officer, or member of the governing body of the 2-23 municipality. 2-24 Sec. 377.052. COMPENSATION. A board member is not entitled 2-25 to compensation, but is entitled to reimbursement for actual and 2-26 necessary expenses. 2-27 Sec. 377.053. MEETINGS. The board shall conduct its 2-28 meetings in the municipality in which the district is located. 2-29 Sec. 377.054. OFFICERS. The board shall designate from the 2-30 members of the board a presiding officer, a secretary, and other 2-31 officers the board considers necessary. 2-32 (Sections 377.055-377.070 reserved for expansion 2-33 SUBCHAPTER D. POWERS AND DUTIES 2-34 Sec. 377.071. GENERAL POWERS OF DISTRICT. (a) A district 2-35 may: 2-36 (1) perform any act necessary to the full exercise of 2-37 the district's powers; 2-38 (2) accept a grant or loan from a: 2-39 (A) department or agency of the United States; 2-40 (B) department, agency, or political subdivision 2-41 of this state; or 2-42 (C) public or private person; 2-43 (3) acquire, sell, lease, convey, or otherwise dispose 2-44 of property or an interest in property, including a development 2-45 project, under terms and conditions determined by the district; 2-46 (4) employ necessary personnel; and 2-47 (5) adopt rules to govern the operation of the 2-48 district and its employees and property. 2-49 (b) A district may contract with a public or private person 2-50 to: 2-51 (1) plan, acquire, establish, develop, construct, or 2-52 renovate a development project; or 2-53 (2) perform any other act the district is authorized 2-54 to perform under this chapter. 2-55 (c) A district may not levy an ad valorem tax. 2-56 Sec. 377.072. DEVELOPMENT PROJECT FUND. (a) A district 2-57 shall establish by resolution a fund known as the development 2-58 project fund. The district may establish separate accounts within 2-59 the fund. 2-60 (b) The district shall deposit into the development project 2-61 fund: 2-62 (1) the proceeds from any sales and use tax imposed by 2-63 the district; 2-64 (2) all revenue from the sale of bonds or other 2-65 obligations by the district; and 2-66 (3) any other money required by law to be deposited in 2-67 the fund. 2-68 (c) The district may use money in the development project 2-69 fund only to: 3-1 (1) pay the costs of planning, acquiring, 3-2 establishing, developing, constructing, or renovating one or more 3-3 development projects in the district; 3-4 (2) pay the principal of, interest on, and other costs 3-5 relating to bonds or other obligations issued by the district or 3-6 to refund bonds or other obligations; or 3-7 (3) pay the costs of operating or maintaining one or 3-8 more development projects during the planning, acquisition, 3-9 establishment, development, construction, or renovation or while 3-10 bonds or other obligations for the planning, acquisition, 3-11 establishment, development, construction, or renovation are 3-12 outstanding. 3-13 Sec. 377.073. BONDS AND OTHER OBLIGATIONS. (a) A district 3-14 may issue bonds, including revenue bonds and refunding bonds, or 3-15 other obligations to pay the costs of a development project. 3-16 (b) The bonds or other obligations and the proceedings 3-17 authorizing the bonds or other obligations shall be submitted to 3-18 the attorney general for review and approval as required by 3-19 Article 3, Chapter 53, Acts of the 70th Legislature, 2nd Called 3-20 Session, 1987 (Article 717k-8, Vernon's Texas Civil Statutes). 3-21 (c) The bonds or other obligations must be payable from and 3-22 secured by the revenues of the district. 3-23 (d) The bonds or other obligations may mature serially or 3-24 otherwise not more than 30 years from their date of issuance. 3-25 (e) The bonds or other obligations are not a debt of and do 3-26 not create a claim for payment against the revenue or property of 3-27 the district other than a development project for which the bonds 3-28 are issued. 3-29 Sec. 377.074. PUBLIC PURPOSE OF PROJECT. (a) The 3-30 legislature finds for all constitutional and statutory purposes 3-31 that a development project is owned, used, and held for public 3-32 purposes by the district. 3-33 (b) Section 25.07(a), Tax Code, does not apply to a 3-34 leasehold or other possessory interest granted by the district 3-35 while the district owns the development project. 3-36 (c) The development project is exempt from taxation under 3-37 Section 11.11, Tax Code, while the district owns the project. 3-38 (Sections 377.075-377.100 reserved for expansion 3-39 SUBCHAPTER E. SALES AND USE TAX 3-40 Sec. 377.101. SALES AND USE TAX. (a) A district by order 3-41 may impose a sales and use tax under this subchapter. 3-42 (b) A district may impose a tax under this subchapter only 3-43 if the tax is approved at an election held under Section 377.021. 3-44 (c) A district may not adopt a sales and use tax under this 3-45 subchapter if the adoption of the tax under this subchapter would 3-46 result in a combined tax rate of all local sales and use taxes of 3-47 more than two percent in any location in the district. 3-48 Sec. 377.102. TAX CODE APPLICABLE. (a) Chapter 323, Tax 3-49 Code, governs the imposition, computation, administration, 3-50 collection, and remittance of a tax authorized under this 3-51 subchapter except as inconsistent with this subchapter. 3-52 (b) Section 323.101(b), Tax Code, does not apply to the tax 3-53 authorized by this subchapter. 3-54 Sec. 377.103. TAX RATE. The rate of a tax adopted under 3-55 this subchapter must be one-eighth, one-fourth, three-eighths, or 3-56 one-half of one percent. 3-57 Sec. 377.104. REPEAL OR RATE CHANGE. (a) A district that 3-58 has adopted a sales and use tax under this subchapter may by order 3-59 and subject to Section 377.101(c), change the rate of the tax or 3-60 repeal the tax if the change or repeal is approved by a majority of 3-61 the registered voters of that district voting at an election called 3-62 and held for that purpose. 3-63 (b) The tax may be changed under Subsection (a) in one or 3-64 more increments of one-eighth of one percent to a maximum of 3-65 one-half of one percent. 3-66 (c) The ballot for an election to change the tax shall be 3-67 printed to permit voting for or against the proposition: "The 3-68 adoption of a sales and use tax at the rate of ____ of one percent 3-69 (insert one-fourth, three-eighths, or one-half, as appropriate)." 4-1 (d) The ballot for the election to repeal the tax shall be 4-2 printed to permit voting for or against the proposition: "The 4-3 repeal of the sales and use tax for financing development projects 4-4 in the __________ Municipal Development District (insert name of 4-5 district)." 4-6 Sec. 377.105. IMPOSITION OF TAX. (a) If the district 4-7 adopts the tax, a tax is imposed on the receipts from the sale at 4-8 retail of taxable items in the district at the rate approved at the 4-9 election. 4-10 (b) There is also imposed an excise tax on the use, storage, 4-11 or other consumption in the district of tangible personal property 4-12 purchased, leased, or rented from a retailer during the period that 4-13 the tax is effective in the district. The rate of the excise tax 4-14 is the same as the rate of the sales tax portion of the tax and is 4-15 applied to the sale price of the tangible personal property. 4-16 Sec. 377.106. EFFECTIVE DATE OF TAX. Except as provided by 4-17 Section 377.107, the adoption of the tax, the change of the tax 4-18 rate, or the repeal of the tax takes effect on the first day of the 4-19 first calendar quarter occurring after the expiration of the first 4-20 complete quarter occurring after the date on which the comptroller 4-21 receives a notice of the results of the election adopting, 4-22 changing, or repealing the tax. 4-23 Sec. 377.107. COLLECTION OF TAX TO PAY BONDS OR OTHER 4-24 OBLIGATIONS. (a) If the district votes to repeal the sales and 4-25 use tax under Section 377.104, and the district had issued bonds or 4-26 incurred other obligations secured by the tax before the date of 4-27 the election, the district shall continue to collect the tax until 4-28 the bonds or other obligations are paid. 4-29 (b) The district shall immediately notify the comptroller 4-30 when the bonds or other obligations have been paid. 4-31 (c) The repeal of the tax takes effect on the first day of 4-32 the first calendar quarter occurring after the expiration of the 4-33 first complete quarter occurring after the date on which the 4-34 comptroller receives the notice under Subsection (b). 4-35 Sec. 377.108. DEPOSIT OF TAX REVENUES. Revenue from the tax 4-36 imposed under this subchapter shall be deposited in the development 4-37 project fund of the district imposing the tax. 4-38 SECTION 2. The importance of this legislation and the 4-39 crowded condition of the calendars in both houses create an 4-40 emergency and an imperative public necessity that the 4-41 constitutional rule requiring bills to be read on three several 4-42 days in each house be suspended, and this rule is hereby suspended, 4-43 and that this Act take effect and be in force from and after its 4-44 passage, and it is so enacted. 4-45 * * * * *